Key Highlights

  • Manufacturing at the Changxing plant was paused at the end of August after inventory reached storage capacity.
  • Sales volumes rose to 275 tonnes in the September quarter, with Brazil accounting for 61% of sales.
  • The Orion Companies placed new orders of about 100 tonnes for immediate delivery, and PET licensed the Phoslock Trademark for blended products in the US.
  • Cash was $3.44 million at 30 September with no Debt facilities, though quarterly operating cash flows have been volatile.

Phoslock Environmental Technologies (ASX:PET) makes Phoslock, a clay product modified with lanthanum that binds excess phosphorus in lakes, reservoirs and waterways and so helps prevent algal blooms. It manufactures in Changxing, China, and sells mainly through distributors in Brazil, the US, Australia and Europe. In its September quarter report, released on 22 October 2026, the company said it had paused Manufacturing at the end of August. Inventory at the plant had reached storage capacity, and several large European projects had been deferred to early 2027.

The company is using the pause to work on a new product family. These are clay-based phosphorus binders with lanthanum levels between 10% and 25%, compared with 5% in standard Phoslock, and a Patent application has been filed. The first bulk pond trial of Phoslock 10 began in October in China.

Sales, production and inventory

Sales volumes rose to 275 tonnes in the September quarter, from 251 tonnes a year earlier and 189 tonnes in the June quarter. Brazil accounted for 61% of the quarter's sales and Australia for 24%. Production was 457 tonnes, and inventory stood at 1,848 tonnes at 30 September, including 983 tonnes held in China. The company expects production to resume in the coming months.

On 28 October PET reported new orders of about 100 tonnes from The Orion Companies, its US distributor, for immediate delivery. That takes Orion's purchases for the year to 158 tonnes. PET also signed a licence allowing Orion to use the Phoslock trademark on some new blended products in the US, with PET receiving a 10% Royalty on Orion's gross profit. The company says this royalty is not expected to be material at first. The existing distribution agreement expires in December 2026, and PET says work on a two-year extension is under way.

New products: early-stage evidence

According to a 7 September update, laboratory testing showed the 20% lanthanum product binding about four times as much phosphorus as Phoslock while keeping free lanthanum release acceptably low. A two-tonne test batch of the 10% product was made on the existing plant in April. These are laboratory and pilot results. The bulk pond trial in Jintan, near Changzhou, will be monitored over several months, and trials in the US, Europe and Australia have not yet been finalised. Regulatory certification and commercial Demand for the new products are still to be shown.

Cash and finances

The Appendix 4C shows cash of $3.44 million at 30 September and no debt facilities. Sales receipts of $1.13 million nearly covered operating outlays, leaving a net operating outflow of only $21,000. That figure was helped by a $116,000 refund of US Import duties. On that basis the 4C estimates 164 quarters of funding. However, the company itself cautions that quarterly cash flows are volatile, and in three of the previous four quarters operating outflows ranged from $752,000 to $952,000. For the half-year to 30 June 2026, PET reported Revenue of $1.49 million and a net loss of $859,000.

Risks and milestones

Demand for lake restoration often depends on public funding and project timing, as the European deferrals show. PET also faces risks from concentration in Brazil and one US distributor, and from holding a large inventory. A Shareholder class action brought by the Banton Group is ongoing; mediation ended without resolution in June, and the company says formal court proceedings may not occur until 2027. Results from the pond trial, the Orion distribution extension and the restart of production are the next milestones the company has indicated.